A senior US army officer has cleared the American engineering company Halliburton of any wrongdoing in relation to a contract to deliver fuel from Kuwait to Iraq, according to a newspaper report.

The Wall Street Journal says that the commander of the Army Corps of Engineers, Lieutenant General Robert Flowers, has exonerated the company's subsidiary Kellogg Brown & Root after Defense Department officials complained that the government had been overcharged by $100m.

The newspaper reports that more junior officers told General Flowers that the company had provided data to show that fuel was delivered at a fair and reasonable price.

Political interest in the US in the allegations of overcharging was heightened by the fact that Halliburton used to be run by the Vice President, Richard Cheney.